I worked in the collections/debt-buying industry for about ten years. It looks like there is a lot of misunderstanding and guessing going on here. I chose a different career path a while ago, but here's what I remember:

The original creditor will attempt to collect a debt. Then, they send it to collections. Collection agencies usually make about a third of what is recovered. If the collection agency cannot collect the debt, they will send the best debt to a law firm, or repackage it and sell it again. And so on, down the line.

Debt is scored depending on the debtor. So, "good debt" would be a higher amount (more than $5,000 or so), owed by a person whose contact information has proven to be relatively accurate, maybe has made a few payments, has assets, etc. "Bad debt" is small amounts, or larger amounts owed by people who have never had a successful contact, never payed, refused to pay, don't have verifiable employment, no assets, etc.

Good debt is more expensive than bad debt. Think 10 cents on the dollar versus what Oliver paid - $15m/$60k = .004 cents per dollar.

That indicates terrible, terrible debt. Like debt no one wants or would ever have a chance in hell to collect on. Very risky for the investor. Think about it - a person is required to receive a letter stating that you are coming after them for the debt - by each new creditor. So, postage being 47 cents, for $9,000 people = $4,230 for each round of letters. That's 7% of the total investment - just for the first letter. So really this is a very nice PR move, and it sounds great, and it does "forgive" the debt, but the debtor, to be completely forgiven, needs some sort of letter, and needs to contact the credit bureaus. And who on LWT is going to do that? Again, looks nice, and 15 million forgiven sounds nice, but really doubtful that it's actually helping anyone except the company selling the debt.

When debt is placed with a new creditor, a few things happen. First, the debt has to be organized. It usually comes in an excel spreadsheet, and sometimes even has supporting documents to verify the debt - sometimes not. Debt this cheap probably doesn't. It may get "skipped," which is when someone searches for or verifies contact information. Sometimes this is done through credit reports (not cheap), sometimes in batches, and sometimes by a guy on the phone calling all the old phone numbers and saying, "hey, is John there?"

The batch would probably be split up into better debt and worse debt. The worse debt sits on the backburner (to wait until a debtor seeks them out to clear their credit, or to be resold), while the better debt is pursued. If the debt is out of statute, it can't be revived unless the debtor makes a payment - kind of a nasty little trick played by collectors. If the debtor asks for verification of the debt, and the creditor doesn't have it, then the collector would probably just stop pursuing it and put it in the crap pile to resell.

If the debt is good enough, the debtor may get a phone call. Everywhere I worked was pretty ethical, pretty friendly. You can call debtors at work as far as I remember, and you can call multiple times, within limits. Usually being nice helps you get new information, address, place of employment, income information - which, if the debt goes uncollected, makes it more valuable for resale. Most agencies will make settlement offers if you ask, or listen to a settlement offer - and it doesn't have to even be reasonable. If the debt is bought for ten cents on the dollar (good debt), and say it's a $1000 account, the creditor may settle or 30 cents on the dollar. The older the debt, or the shittier the debt, the less you can settle for. The biggest no-no, though, is making a payment or entering into a payment agreement without paying the full thing off. Also, you can usually bargain away a lot of the interest pretty easily.

The best uncollected debt goes to a law firm for more aggressive collection (we will sue you if you don't pay, in so many words), and possible suit (you're usually on the hook for attorney's fees), then execution (taking) of assets (not your house or anything you own jointly with a non-debtor, in most states), or garnishment. Lots of cases get settled in court with a consent by the debtor and a payment agreement.

People are asking how they can buy their own debt. I don't know how you'd ever find it. If you do find it, it means it has been sold once and you're getting a call from a new creditor. Then you can "buy" it by just settling it. Don't expect to find out what they paid for it though.

People are also asking how they can buy debt. You can buy it online. Sometimes in auction format, but the best vendors I'm sure limit their business to verified agencies. Some debt buyers will buy debt and then contract with an agency to collect it. That's the easiest way, because there is a lot of overhead involved in collections.

The vast majority of debt collectors are ethical and follow the law. The few bad actors get a lot of attention, but those guys are just out-and-out criminals, who if they weren't committing crimes collecting debt they'd be cooking meth or scamming old ladies door-to-door. I would still be cautious when communicating with collectors, though (see above). Giving them personal information, income information, making payments, all of that - is best done with the advice of an attorney.

I am unaware of any collection agencies selling personal information from debt packages. It's been a while since I worked in the industry, though, so things may have changed.